A smarter way to help slash energy bills in the North East

With rising electricity bills at the top of the political agenda Peter McCusker reports on a £54m North East project aimed at helping business and domestic customers to use energy in a smarter way

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British Gas's energy monitor, the 'pebble'

Free electricity on a Saturday and cheaper energy during off-peak periods are just some of the benefits hundreds of North East households are enjoying in an on-going trial.

Launched in 2011 the Customer-Led Network Revolution (CLNR) – the largest of its kind in the UK - is now producing results which will shape how we power and heat our homes, offices and factories in the future.

A joint initiative between Northern Powergrid, British Gas, Durham and Newcastle Universities and National Energy Action it aims to change the existing dynamic between consumer and provider, and support the move towards the creation of a smarter and greener electricity network.

Initial findings show that the 12,000 North East domestic and business customers involved in the trial have reduced energy consumption and cut their fuel bills.

Customers involved in the CLNR trials are using smart meters which allow them to monitor usage and have been offered time-of-use tariffs which have changed the way they use electrical equipment.

Earlier this month the CLNR partners assembled in London to assimilate findings and look at how it may develop over the coming year.

They reported that on average the customers on a time-of-use tariff consumed 3% less than the control group and reduced their peak consumption by 10%.

Between the peak hours of 4pm and 8pm on a weekday, when electricity costs 30% more than otherwise, almost all made efforts to shift energy consumption.

Some time-of-use tariffs allow consumers access to free electricity on Saturdays and many have chosen to alter energy use behaviour.

Dr Liz Sidebotham, of the Northern Powergrid, is communications manager for the project. She said “Our preliminary findings at this stage have shown a huge interest from domestic customers for time-of-use tariffs, suggesting that customers are willing to take ownership of their electricity consumption in return for lower bills.

“We’ve also seen signs that customers are open to changing their usual routines ? putting their washing machine on overnight instead of during the day for example ? to benefit from a cheaper tariff.

“This is a win-win situation, as it offers customers a way to save money and network operators a means of cost-effectively reducing network demand at peak times.

“Ultimately, the integration of smart solutions is a far more practical and cost-effective course of action than a full-scale upgrade of the UK’s existing network cables and transformers, which would cost billions and cause widespread disruption.”

Jon Bird, head of sustainability at Northern Powergrid, the electricity distribution network operator for the North East and Yorkshire, says CLNR is changing the dynamic between buyer and seller and leading to the development of a smarter network.

He said: “A smarter network means moving from ‘fit and forget’ to active management and encourages smarter customers to move towards greater control over the time and amount of electricity use, enabled by using smart meters

“We are also working towards smarter communication – active real time interaction between customers and network.”

This focus on smarter communication is being trialled with business and industrial customers who have signed contracts which reward them for being able to reduce demand at peak times – a component of the system known as demand side response.

Professor Phil Taylor, director of Newcastle Institute for Research on Sustainability at Newcastle University, said: “The trial is showing that we can remove the peak from the system and could mean that Northern Powergrid may not have to spend millions of pounds on infrastructure upgrades.”

He continued: “The project is now really delivering against our bold aims by providing insights into how people use energy and how emerging network technologies can be used to enable domestic, SME and industrial and commercial customers to make the low carbon transition.

“The CLNR project has produced a huge amount of knowledge regarding the challenges electrical networks will face over the next decade, we have a much clearer picture about how, when and where these challenges will appear.

“The good news is that we have also discovered a multitude of potential solutions to these challenges thus providing distribution network operators and supply companies with a much richer toolkit to call upon in designing, operating and investing in future networks.

“As we move into the latter stages of the CLNR project we are still uncovering new knowledge about smart grids, but the objectives are now shifting more towards distilling all of the knowledge generated into actionable outputs such as design guidelines, technical standards, planning tools and customer engagement methods.

“We are working hard to make sure there is a lasting legacy from this project such that electrical networks are planned, designed and operated differently as a direct result of the CLNR learning.”

One unusual aspect of the research has been a focus on the sociological drivers behind energy consumption.

This has seen a team of researchers from Durham University’s Energy Institute (DEI) interview hundreds of participants, including 150 business users.

Harriet Bulkeley deputy director of the DEI at Durham University, said: “The new trials that are happening at the moment are going further into depth to try to understand what the effects of the smart meters are, why it is that you get those kind of results, and how they combine with other things, such as time-of-use tariffs, which will add detail to our understanding of what a smart meter roll-out might look like.

“What we found is that roughly two-thirds of the people that we have spoken to are very enthusiastic about their in-home displays, about one-third of them are less enthusiastic, and about 3% actively disconnect them, so very few actively move away from them.

“We find the idea of a smart grid trial has provoked within people a sense of a civic relationship with the grid.

They treat it not so much as a matter of a consumer relationship, but they are quite interested in their own role in keeping the lights on, in securing energy futures, and in the decarbonisation and climate change agenda.”

“We’re using new analysis approaches that can combine these insights with engineering data and modelling about how the grid might work in the future to identify lessons for how society should be engaged with the development of the electricity network in the UK.

“The key challenge ahead for CLNR is to bring the diverse elements of the project together. This was central to the design of the project from the outset, but with each element consisting of a large and complex trial in its own right, joining up these pieces is a significant research challenge.

“The overall objective - of how to design an electricity grid that can cope with the demands of energy security, renewable energy and addressing climate change - remains the same, but we are learning all the time of new, innovative ways to get there.”

The CLNR partners hope the adoption of a smarter network, combined with flexible customer demand response, will help facilitate the widespread adoption of low carbon technologies such as solar photovoltaic panels, heat pumps and electric vehicles,.

John Mulcahy, head of technology at British Gas Connected Homes, and CLNR programme manager, said: “The project has come a long way since it started; we’ve recruited over 12,000 British Gas customers, giving them a chance to trial the technology of the future, and to get a glimpse into how we’ll manage energy in the years to come.

“From the air source heat pumps, smart washing machines and smart meters we’ve installed in our customer homes and the feedback they have provided, we’ve captured a deep understanding of the way our daily routines affect energy consumption, and what the pressure will be in future on the electricity grid.

“Now we can start to turn that insight into action. We know that low carbon technologies are essential to meeting our future energy needs, but the electricity network requires substantial investment to incorporate those technologies.

“So it’s vital that we find the most cost effective ways of delivering the capabilities the grid needs.

“For example, we’re learning from our time-of-use tariff trials that most customers are willing to be flexible about when they use energy.

“We can now use that knowledge and other things we’ve learnt on the trial to develop innovative commercial products and services that will put our customers in control of the smart grid and deliver reliable, sustainable energy for years to come.”

The trial concludes early next year with the CLNR partners aiming to present their findings to market regulator Ofgem, who funded the scheme, later in 2014.

The CLNR partners are likely to make a number of recommendations to Ofgem including proposals to facilitate energy storage and to increase choice and dialogue between consumers and energy companies.

But its secondary aim of helping to cut energy bills – at a time when customers are facing hefty annual increases - will also appeal to many business and domestic customers.

'Energy Burst'

With 60% of the UK’s 100GW of electricity capacity due to come off line in the next decade the Government is anxiously pressing for new capacity to fill the gap.

The Energy Bill sets in place subsidies to support renewables technologies, such as offshore and onshore wind, to help with the transition from fossil fuels to a low carbon network.

But at this point in the game there is no hope of renewable technologies filling the looming energy gap – with significant breakthroughs in energy storage still some way off.

Hence the Government’s delight at securing the deal with EDF for a new nuclear power station at Hinkley Point, Somerset, which will generate 7% of the UK’s capacity when fully operational by 2020.

Nuclear power is a low carbon energy source and unlike intermittent renewables, such as solar and wind, is a reliable base-load option.

It, therefore, ticks two of the three boxes of what many in the industry like to call the “energy trilemma’” – it supports the UK’s energy security and is low carbon.

Whether it ticks the third box of affordability is open to conjecture. The strike price deal of £92.50 per MW/h (megawatt hour) for 35 years is far below that of offshore wind at £155 per MW/h and if EDF embarks on a second reactor in Suffolk this price will fall to below £90 per MW/h.

But with wholesale market electricity prices between £40 and £50 per MW/h it will cost the hard-pressed bill payer in the long-run.

The Government flimsily argues that by 2030 the deal will save bill payers money, but this is based on assumptions that energy bills will continue to rise as we move from fossil fuels to low carbon power sources.

In fact by arguing the deal will save bill payers in the long term the energy department is effectively saying it expects energy bills to move north towards the £90 per MW/h EDF strike price by 2030 – which is a sobering thought for all.

While EDF has said it will put money to one side to pay for decommissioning and waste disposal, cost overruns are a feature of the nuclear industry.

Earlier this year Hinkley was estimated to cost £14bn, but this week’s announcement has seen that already rise to £16bn. EDF and its construction partner fellow French Government owned company Areva are currently involved in two new nuclear builds in France and Finland, which are both behind schedule and costing more than anticipated.

At Flamanville in France the cost of a single European Pressurised Reactor (EPR) has tripled after four years delay to 8.5 billion euros.

The Finnish project using the same EPR is seven years late.

The UK Government has pledged to provide a loan guarantee for £10bn of the Hinkley construction costs, exposing the taxpayer to potential liabilities should the project stall or fail.

With other consortia looking to build new nuclear plants in the UK the Government will hope this week’s announcement will re-start an industry which has lay dormant in the UK for a generation. It is hoping resulting economies of scale may force prices down - but at a time of rising energy prices it is unlikely a UK nuclear renaissance will come cheaply for hard-pressed domestic and commercial bill-payers.